Pasquale Natuzzi

Investor day
London
February 23, 2011
1
Agenda
Pasquale Natuzzi
Welcome and Company Overview
Simon Hughes
Leverage on Natuzzi and Italsofa
Mimmo Cavallo
Recover core business with Editions
Vittorio Notarpietro
KPI
Walk-through:
Stefano Sette - Giuseppe Clemente
Product Innovation, New Manufacturing Process (moving line)
2
Global business matrix
to build the future
Pasquale Natuzzi
3
1959: 52 Years of Challenges
KEY FACTS
DNA:
−
−
−
Innovation
Product development and
manufacturing Know how
International presence
BASIC VALUES:
−
1959: the long running starts
−
−
Integrity
Responsibility
Transparency
4
The Group in the 90‟s
At the end of the 90’s Natuzzi is a manufacturing company, world leader in leather
upholstery with 5 plants in Italy, and 2 trading offices, exporting to 123 countries
5
New competitive scenario
1997
KEY FACTS
Chinese Competition,
and market globalization
Natuzzi concerns:
Protect the existing business
6
New strategy
Middle-High
Repositioning Natuzzi Brand
Middle & Middle/Low
Middle/Low
Competing in the promotional
segments of the market
7
New strategy
Global production: New Factories abroad
BAIA MARE - ROMANIA
SALVADOR DE BAHIA BRASILE
SHANGHAI - CINA
To compete in the middle-low part of the market
8
The brand building project
Visual identity
9
Old Product
10
New product: Total Living
11
Product extension
12
Old Store
13
New Store
14
International development
48 stores in the Asia Pacific Region of which 21 in China
SHANGHAI
15
International development
15 Stores in Australia
ADELAIDE – (AU)
16
International development
100 Stores in Italy
MILAN
17
International development
21 Stores in Spain
BARCELLONA
18
International development
27 Stores in France
PARIS
19
International development
5 Stores in Switzerland
WINTERTHUR – (CH)
20
International development
UK: 22 Stores / Concessions
LONDON
21
International development
UK: Galleries at Harrods, Selfridges and House of Fraser
22
Old advertising
23
New advertising
24
Current distribution network
290 Stores
375 Galleries
Stores: 237
Galleries: 297
Stores: 6
Galleries: 61
Stores: 48
Galleries: 17
25
Investments
Natuzzi Brand Building Investment
2003 - 2010
• New Product Development
• Italian Plant requalification
• Store and Gallery development
• Marketing and Advertising
Total investment of € 420 mln
Equal to 9% on total revenues of € 4,5 bln
26
Group brands portfolio
Mission: Italian Total living
Positioning: Middle/high
Channel: B2C, Retail
Mission: Affordable innovation
Positioning: Middle/young generation
Channel: B2C, Retail
Mission: Surrounding comfort
Positioning: Middle/low
Channel: Wholesale
27
NTZ Group global presence
Despite market crisis, emergence of Chinese competition and high currency volatility,
we invested and created:
•Global sales network
•International production hubs linked to brands/ markets
Plants
11
Trading
Offices
8
Stores/
Galleries
763
Next step: Reduce complexity
28
Integration, simplification & innovation: Global business matrix
3
3
BRANDS - CONSUMER
3
MACRO MARKETS
SEGMENTATION
CHANNELS
•
•
•
• Natuzzi
• Italsofa
• Editions
MANUFACTURING HUBS
•
•
•
Europe
America
Asia Pacific
3
3
DISTRIBUTION
Retail
Wholesale
Key customers
3
ORGANIZATION LEVELS
GUIDELINES AT EVERY
ORGANIZATION LEVEL
• Europe (Italy and Romania)
• Corporate
• Sharing
• America (Brazil)
• Regions
• Accountability
• Asia (China)
• Country
• Discipline
29
Management
Chairman & CEO
Audit Committee
Pasquale Natuzzi
Chief Institutional
Relations &
Corporate Comm.
Officer
Giacomo Ventolone
Chief Research
& Development
Officer
Stefano Sette
CFO
Chief Internal Control
Systems Officer
Giuseppe Cacciapaglia
Chief Legal Officer
Stelio Campanale
Chief Procurement
Officer
Vittorio Notarpietro
Giambattista
Massaro
Chief HR &
Organization Officer
Chief Operations
Officer
Fernando Rizzo
Giuseppe Clemente
CIO
Angelo Colacicco
Chief Natuzzi
& Italsofa Division
Chief Editions
& Softaly Division
Simon Hughes
Cosimo Cavallo
30
Global business matrix
Brands
Simon Hughes
31
Natuzzi Retail
1) Direct vs. Partner
•Existing DOS focus on operations + profit
•Partners primarily for development markets (local knowledge and retail expertise)
2) Growth
•2010 DOS 2011 DOS
3) Performance
a
•Traffic driver “affordability”
•Total look “sales”
•Increase average tickets price “service”
b
•A more affordable concept
•Training critical
•Rigorous analysis
4) Collection rationalization
•Core collection (10 models 65% total sales)
•Retail collection (only 60 models)
•Replenishment program
5) Marketing
•Consolidate spend
•Promote total look
•Drive traffic
32
Italsofa Brand
Mission: Affordable innovation
Positioning: Middle/young
generation
Channel: B2C, Retail
33
Products
34
Store concept
35
Distribution Network
26 Stores
16 Galleries
Stores: 2
Galleries: 2
Stores: 9
Galleries: 7
Stores: 15
Galleries: 8
36
Advertising
37
Co-Advertising
38
Retail Key Actions
1) Reposition with more contemporary design aesthetic
2) More affordable brand for young (in spirit) consumers
3) Upgrade existing network from wholesale to retail model
4) 220 Gallery committed (2010)
39
Global business matrix
Markets
Mimmo Cavallo
40
Editions
Mission: recover our core
business with Wholesalers
& Mass Merchants
41
Editions
42
Editions
43
Editions
44
Mass Merchants program
• Identify/ open existing and new accounts in the Mass Merchants
cluster
• Capitalize on the success with IKEA and duplicate the same
business model
• Regain sales with the Key Accounts
45
Mass Merchants program
Key success factors:
• Excellent service (10 days from order entry to finished products,
plus transit time)
• High quality standards
Rationale:
• Limited number of models, coverings and versions
• Accurate forecasting
• Targeted price points
• Strict monitoring of the KPI‟s
• Dedicated production lines
46
Mass Merchants: Business opportunities
NORTH AMERICA
Nearly € 100 mln worth of sales to be
recovered with the major accounts. E.g.:
EUROPE
Over € 50 mln worth of sales to be
recovered with the major accounts. E.g.:
•
MACY'S
•
REID
•
THE BRICK
•
LIVING
•
R.C. WILLEY
•
BEGROS
•
ART VAN
•
BOHUS
•
SOFA MART
•
UNION
•
ROOMS TO GO
•
ATLAS
•
SLUMBERLAND
•
MIO
•
DILLARD'S
•
AMERICAN SIGNATURE
47
IKEA
Leverage on our best practice with IKEA, the most demanding retailer in the world
Baiamare
Plant
IKEA
Warehouse
13
18 years of strong partnership based on high level of service, quality and value
48
2010 Achievements
&
2011 targets
Vittorio Notarpietro
49
IT System AS WAS
Business
intelligence
Natuzzi Italia
Impe e Natco
BI Microsoft
Board Sales
NCRM
RPG Order
Management
RPG Order
management
NARES
Ciclo dell'ordine
Business Portal
Fatturazione
Acquisti e produzione
Acquisti mat diretti
Gestione fisica stabilimenti
e magazzini
Avanzamento produzione
Finance & Controlling
NARES
NCRM
RPG
OM
NARES
Business Portal
Order
Management
WEBCLAIM,
Cybertec
Natplan
Sofapacker
RPG manufacturing
RPG trasporti management
Ares
RPG manufacturing
RPG order management
Ares
DSS trasporti
RPG Invoice
Ares
JDE
JDE
RPG manufacturing
Ares
RPG acquisti
Ares
RPG Invoice
RPG Invoice
NARES
JDE
RPG manufacturing
JDE
RPG Manufacturing
RPG Manufacturing
Ares
Incas WMS
DSS (…)
Ares
Unix (…)
Datasys
Vefa Indiretti
ACG
VeFa Diretti
ACG
JDE
Local
application
Piteco
CDR
Controllo
Easy report
CDR
ACG
Local
application
ACG
ACG
Local
application
Local
application
JDE
Local
application
Tesoreria
Local
application
ACG
Local
application
ACG
Piteco
Local application
JDE
JDE
Local
application
Piteco
Local
application
JDE
Local
application
Local
application
Easy Report
Consolidamento
Pianif
icazio
ne a
medi
o
Board Sales
Board, as400
ACG
Pian. a medio produzione
Board Sales
NCRM
WEBCLAIM,
Amministrazione
Product Costing
Europa
BI Microsoft
Board, as400
Acquisti mat indiretti
MRP Mat. Diretti
Cina
RPG Order Management
Aftersales
Spedizione
Brasile
Business Portal
Gestione ordini (credito,
validazioni, …)
Pianificazione a breve
Romania
CDR
DW reporting
Retail / Presa ordine
USA
BI Microsoft
Outlooksoft
DPM
Manuale
Soluzione
forecast
50
IT System AS IS
Business Intelligence – Corporate Performance Management
Demand
Planning
APO
Sales and
Distribution
SD
Controlling
CO
Business Planning
and Consolidation
BPC
Financial
Accounting
FI
Material
Management
MM
Production
Planning
PP
Warehouse
Management
WM
Human
Resource
HCM
Quality
Management
QM
NATPLAN
ARES - Conceria NATCO
Legacy MES (Unix + DSS)
• Ottimizzazione sequenze produttive, attribuzione
ad operatori,…
• Analisi produttività
• Gestione stampe di produzione (nota lavoro,
etichette imballo, …)
• Controllo qualità (*)
• Gestione manutenzione (*)
• Avanzamento di produzione
NARES
BUSINESS
PORTAL
WEB CLAIM
NADOS
SOFAPACKER
Price Lists tools
Tesoreria - Piteco
Byte Payroll and
time management
51
2010 Achievements: SAP roll-out
Finance &
Controlling
(FI-CO)
Purchasing (MM)
Diretti
Indiretti
Prouction
Planning
(PP)
Sales
Distribution
(SD)
Italy
2008
USA
2008
Romania
2009
2010
2009
China
2009
2010
2009
Brazil
2009
Warehouse
(WM)
2011
2009
2011
2009
Demand
Planning
(APO)
2011
Human
Resource
(HCM)
2011
2010
2011
2010
2011
2011
2010
2010
2011
2011
2011
UK
2009
2011
2011
Switz.
2009
2011
2011
Spain
2008
2011
2011
Benelux
2011
2011
2011
Live
2009
Non live
52
2010 Achievements
(*)
• Recovery of Sales in North America 32.7% and Asia 27.2%
• Entered in India and Brazil markets
• Improved business with IKEA
• Good initial reaction of the Market for the new Italsofa Brand
• Improved operations efficiency COGS from 65.2% in „09 to 62.3% in „10
• Successful NAP process: reduction lead time from 16 to 10 weeks
• Important SG&A reduction plan from 38.3% in ‘09 to 37.7% in ‘10
EBIT 2010 = in the area of breakeven
(*) all numbers and % are as at 30 September 2010
53
2010 Achievements
Relocation of the primary China factory
• Construction of the new factory of 88.000 SQM in “Minhang Export Processing Zone” in Shanghai
• Production full Capacity completed by May 2011
• Entire Chinese NTZ production will be grouped within the next future in the new factory
• Total Indemnity: €47 million approximately 420 million RMB
• Account effects:
•€47 million cash (420 M Rmb)
•€19 million write off of the Book value of the old factory (166 M Rmb)
•€28 million approximately as extraordinary revenues
•Payment in 3 trances:
•50% within 5 day from signing (January 26th 2011)
•45% within end of February 2011
•5% within end of May 2011
54
2011 targets
NET SALES:
single digit increase
COGS:
to continue efficiency process
SG&A:
to carry on reduction plan
EBIT :
positive % on Sales
NFP :
significant increase (almost doubling)
Natuzzi Group is working on a 5 year BP that will focus:
•Recover sales in the major markets
•Development in fast growing markets (China, Brazil, India)
55
Innovation
Today the Company is ready to get focused on its strengths
and get competitive advantage through innovation
PRODUCT
Style and Materials innovation
Synergies in components
Innovation according to “moving line” production system
MANUFACTURING PROCESS
Moving line to recover productivity
From manual cutting to virtual nesting and automatic cutting
HQ ACTIVITIES AND SERVICES
Focus on strategic markets and priorities. SAP implementation
COMMERCIAL AND RETAIL PROCESSES
New organization with high focus on brands differentiation
and Channel management
56
Forward-looking Statements contained in this document, particularly the
ones regarding any Natuzzi Group possible or assumed future performance,
are or may be forward-looking statements and in this respect they involve
some risks and uncertainties.
Natuzzi Group actual results and developments may differ materially from
the ones expressed or implied by the above statements depending on a
variety of factors.
Any reference to past performance of Natuzzi Group shall not be taken as
an indication of future performance.
This announcement does not constitute an offer to sell or the solicitation
of an offer to buy the securities discussed herein.
57